Easier rules boost FDI inflows from China by $500 million
NEW DELHI: Govt’s decision to allow companies and funds with under 10% holding of Chinese entities has helped generate over $500 million (Rs 4,895 crore) foreign direct investment since the rules were eased in May.Addressing demands from industry, govt had decided to ease the blanket review of all FDI proposals from land bordering nations – which was focused mainly on China – and allowed investors with non-controlling ownership of up to 10% from these countries to invest through the automatic route, which only comes with reporting requirements. It had also decided to provide for time-bound approval in certain “strategic sectors”.The department for promotion of industry and internal trade said that up to Thursday, 29 FDI proposals had been reported under the revised framework. These investments span a range of sectors, with significant investments in information technology, artificial intelligence, information and communication, manufacturing, pharmaceuticals, data centres and transport services, among others. The investments have been reported from entities based in jurisdictions, including Mauritius, the US, South Korea, Japan, Singapore, Luxembourg and the Cayman Islands, an official said.Several funds had complained that their investment proposals were held up due to the prescription under Press Note 3 that followed the Covid-19 outbreak in 2020.“IVCA appreciates DPIIT’s receptiveness and responsiveness to industry suggestions on Press Note 2. This engagement is translating into tangible outcomes, with investors experiencing greater ease in undertaking foreign investments. Further steps being taken will make the framework more efficient, strengthen investor confidence and reinforce India’s commitment to ease of doing business,” IVCA president Rajat Tandon said.“With Press Note 2 of 2026 and the consequent amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, notified on May 1, 2026, the beneficial ownership test is now applied at the level of the investor entity,” govt said.
